Butterfield Bank has received improved ratings from financial research and analysis specialists Moody’s, underlining its status as the Island’s leading local bank.

Its long-term deposit rating has gone up three notches from a “upper-medium” low risk of A3 category to a “high quality” very low risk Aa3.

And the bank’s short-term deposit ratings have also been elevated, on a different scale, from P2 to P1. That means the bank is now considered to have a “superior ability” to repay its short-term debt obligations compared to its previous status as having a “strong ability” to do so. Moody’s Investor Service has conducted a major review of world banks to assess their financial strength and ability to protect customers’ money.

While Butterfield Bank has been delighted with its improved status the ratings for Bermuda Commercial Bank remain unchanged and “on review for downgrade,” according to Moody’s.

Moody’s used a Joint Default Analysis (JDA) methodology, which identifies four potential sources of external support for banks; parental support, support from a co-operative or mutualist group, support from a regional or local government and systemic support, as part of its review of the banks.

It also used an updated Bank Financial Strength Rating (BFSR) system which evaluate the stand-alone financial strength of banks without reference to external support factors.

“Upon applying Moody’s JDA methodology, the long-term deposit rating is raised three notches to Aa3 from A3,” said Moody’s in a statement.

“We consider Bermuda to be a medium support, highly dollarised country, and have assumed a support level of 90 percent in this analysis, based on Butterfield Bank’s position as the leading local bank on the Island.”

Alan Thompson, Butterfield Bank president and CEO, said the ratings increase was tremendous news. “I am pleased to advise that Moody’s has upgraded the ratings that they issue for the Bank,” he said.

“The Bank was upgraded in all nine categories for which it receives a rating. Of particular significance to us is a three notch increase for the long-term bank deposits — a relatively rare occurrence in the industry.